Going back on the Gold Standard

I have talked with every one I know:"What is a dollar worth?" And they look back, puzzlement in their eyes. The fact is, we have no idea. 5 years ago a dollar was not worth much, as so many folks traded dollars for real estate. 15 years ago we had no idea as we traded dollars for tech stocks. We have never thought dollars were worth much because as a country we rarely saved them.

We are printing money like sand on a beach now. Do you know what your dollars are worth? The government does not want to give us dollars directly, because they fear that we will save them instead of spend them. What would have been wrong with saving money thereby making dollars more valuable.

Loss of control over economic policy. If the U.S. and a substantial number of other industrial economies adopted a gold standard, the U.S. would lose the ability to tune its economic policies to fit domestic conditions.

For example, in the spring of 1995 the dollar weakened against the yen. Under a gold standard, such a decline in the dollar would not have been allowed: instead the Federal Reserve would have raised interest rates considerably in order to keep the value of the dollar fixed at its gold parity, and a recession would probably have followed.

I have talked with every one I know:"What is a dollar worth?" And they look back, puzzlement in their eyes. The fact is, we have no idea. 5 years ago a dollar was not worth much, as so many folks traded dollars for real estate. 15 years ago we had no idea as we traded dollars for tech stocks. We have never thought dollars were worth much because as a country we rarely saved them.

We are printing money like sand on a beach now. Do you know what your dollars are worth? The government does not want to give us dollars directly, because they fear that we will save them instead of spend them. What would have been wrong with saving money thereby making dollars more valuable.

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No! Not now. I was HEAVILY invested in gold through 2007, after a handful of years. Qualified accounts saw 25%+ allocations, and non-qualified I'd play options on the XAU and mining stocks. Bummer watching the au crack a dime these days...and I've only got a handful in it :frown1:

VerifiedGold Member

As the economy begins to heat up, gold will fall for a time as those seeking shelter reenter the equities market.

But there are two events which would send gold through the roof in dollar terms:

1. The dollar is high now relative to other currencies because treasuries are the only safe bet. Once another bet becomes safer, probably when Europe or Asia recovers before the US (totally reasonable with Geithner and Summers at the helm) capital will seek its level and Treasury will have to raise bond rates to attract captial. This will drive the dollar down because without foreign exchange buying US debt, the dollar has no value.

2. Once the US economy begins to cease contraction, the full impact of the creation of some $10t will visit galloping CPI inflation, possibly money in wheelbarrows time.

In either event, it is quite likely that the USD will cease to be the world reserve currency within the next 18 months, and the US will have to back up its currency through a real productive economy or gold.

Gold Member

"Loss of control over economic policy. If the U.S. and a substantial number of other industrial economies adopted a gold standard, the U.S. would lose the ability to tune its economic policies to fit domestic conditions."

Because their tuning has worked so well in the past.

I think the obsession with fiat currencies is more the point. But nothing will ever be done about that.

VerifiedGold Member

Not to argue for a return to the gold standard, but what global market economy are you referring to?

It seems like the past 12 years (and counting back every day) of economic activity has been wiped out summarily as a consequence of the inability of the global market economy to safely disperse risk and raise living standards.

So-called globalism and "free trade" combined with the financialization of the US economy, where finance moved from a vehicle for lubricating capitalism to the center stage of capitalism itself were the economic scripture put in place by Ronald Reagan, the prophesies of which have been proven incorrect.

We've seen our good paying jobs offshored, productive real economy hollowed out all while standards of living have fallen in the US over the past 25 and 10 years. Globalization has allowed capital to penetrate into formerly subsistence agrarian societies such as Mexico where the promise of quick wealth has lead to the rise of a gangsta class there.

Some of us were alive and politically and economically conscious before Reagan. We know that there are other ways to organize an economy. Just as it took some time in Russia for the chattering classes to acknowledge the fall of the Soviet Union, our own chattering classes are issuing sound bytes based only on that with which they feel comfortable.

But what we are really seeing right now is the other shoe dropping signaling the true end to the cold war and bi/uni lateralism. Without the compliant resource rich third world under colonial rule, not compelled to provide the global northern economies with cheap raw materials, the chance for a 1950s style industrial recovery in the US are even more remote.

This is what happens when religion supplants science in politics and economics.

Gold Member

But what we are really seeing right now is the other shoe dropping signaling the true end to the cold war and bi/uni lateralism. Without the compliant resource rich third world under colonial rule, not compelled to provide the global northern economies with cheap raw materials, the chance for a 1950s style industrial recovery in the US are even more remote.

This is what happens when religion supplants science in politics and economics.

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Fucking spot on man!!!!

But can't the industrial world make goods while paying for what the raw material is worth? Bolivia is sitting on the world's largest supply of Lithium. It seems that the car manufacturers are sitting on their hands to make electric cars until his government is overthrown... a game of chicken.

It seems that the fucking wealthy investor class of this planet is only interested in making money hand over fist through the disenfranchisement of third world people by effectively stealing their resources.

Of course the gold is probably gone by now... I am sure that the Bush administration spent the gold like they spent our surplus.

Gold Member

Not to argue for a return to the gold standard, but what global market economy are you referring to?

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The global economy is the very one you mention that has been devastated by the republican deregualtion and free market imbecility.

You have no idea what a shithole we would be in right now if the rest of the world had not dispersed that Bush era risk globally.

It seems like the past 12 years (and counting back every day) of economic activity has been wiped out summarily as a consequence of the inability of the global market economy to safely disperse risk and raise living standards.

So-called globalism and "free trade" combined with the financialization of the US economy, where finance moved from a vehicle for lubricating capitalism to the center stage of capitalism itself were the economic scripture put in place by Ronald Reagan, the prophesies of which have been proven incorrect.

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Bingo. top of the class.

The problem is this extremist notion republicans have succumbed to that 'free market' means a totally 'unregulated' market.

It doesn't. A free market is no different than a free society- one regulated by law and POLICED for compliance.

We've seen our good paying jobs offshored, productive real economy hollowed out all while standards of living have fallen in the US over the past 25 and 10 years. Globalization has allowed capital to penetrate into formerly subsistence agrarian societies such as Mexico where the promise of quick wealth has lead to the rise of a gangsta class there.

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Agreed, but that is hardly an argument against a global economy. It is not as if Mexico has not ALWAYS had a culture of mordida, graft, corruption, black markets and crime.

The problem has been the lack of regulation of globalization. The US for example, should not be allowed to offshore jobs any faster than jobs are being created.

And I totally agree that the inclusion of DEBT as a form of 'product' is the fundamental culprit.
Government must act to spur the reserach and business investment that will result in new technologies and manufacturing based 'GNP'. And it must place a governor on the pace of globalization.

But, in truth, nothing can stop globalization of the economies of the world.
And the the fact is that countries that are economically inter-reliant do not war against each other.

Some of us were alive and politically and economically conscious before Reagan. We know that there are other ways to organize an economy. Just as it took some time in Russia for the chattering classes to acknowledge the fall of the Soviet Union, our own chattering classes are issuing sound bytes based only on that with which they feel comfortable.

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While the demise of US economic hegemony is almost certainly nigh, I would not count it out entirely.

Capitalism has actually been a very effective tool for improving the lifespan and quality of life for billions of people.
It has done wonders in China and India.
But it is entirely reliant on the concept of ever growing markets and ever growing demand.

With industrialization on its current arc, By mid century world population will peak at around 11.5 billion and start a long and inexorable decline.
At that point, with industrialization global, the ponsi scheme of capitalism will have to end.

What the US and much of western europe is facing is the fact that we need to start developing, NOW the economic models for a Post-growth world.

While temporarily painful...I am optimistic that this kind of economic upheaval will force people to start to realize that a Greed driven economic model is inherently flawed... and must give way to a more enlightened and intelligently planned economy.

But what we are really seeing right now is the other shoe dropping signaling the true end to the cold war and bi/uni lateralism. Without the compliant resource rich third world under colonial rule, not compelled to provide the global northern economies with cheap raw materials, the chance for a 1950s style industrial recovery in the US are even more remote.

This is what happens when religion supplants science in politics and economics.

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Amen to that, brother- especially when you realize that conservative capitalist free marketeerism qualifies as a religious belief unfounded in evidence nor science.

what the deuce are you talking about... it's not gold "backing" each dollar, it's using gold as the benchmark for currency. stay with the class Phil.

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He's talking about the days of gold and silver Certificates that were freely circulated as currency with-in living memory of myself and others here, i'm sure. At the time the were issued they were infact redeemable for there worth in said precious metals.

It's all irrelevant now. The entire worth Of Fort Knox holdings is only about a half trillion dollars. That's how fucked this country is financialy.

Gold standard is a little silly, as the wealth of nations is no longer determined by its gold reserves, but by what products it can provide. However, I think that money supply should be provided on a strict formula, based on population. No more secret fed manipulations. Every year, it should be known exactly what the limited pool of dollars will be, and what it will be 10 years from now.

If a Dollar is only a representation of value, what makes you think gold is anything but. It serves very little purpose apart from looking pretty. Only perceived as a 'safe' median because of its historical context, its value in the real world is determined by the confidence that there is no better alternative store of value.

My crystal ball says that if the world continues towards globalization and industrialization like the last 100 years - gold will be acknowledged for what it is - jewellery.

Gold Member

Well, actually gold is essential as an electrical conductor for many electronics, including mother boards, flashing for connector pins at the male end of delicate electrical cables, the individual pins that connect to each four-pixel chip in your big screen TVs, as well as for use in whipping up batches of stuff in metallurgy used in medical devices, instruments, and mixed with the slightly radioactive palladium that is used for the base of dental crowns upon which enamel is baked. So there will always be a need for it. But there is not enough gold in the world to back up the dollars in world circulation.

There's a guy outside of Pahrump, Nevada that dug a pit on the edge of town, lined it with a concrete bunker, loaded it with gold and silver ingots, and then back filled the hole to cover up the bunker. It's protected by a high chain link fence with razor wire, and juiced with enough electricity to cause some damage if you messed with it. It's under 24-hour video surveillance as well as one or two human guards who keep watch over it. But the guy loses more money keeping guard over his hole filled with treasure than the ingots of bullion gain in value when the precious metals market goes up (and then back down). Still, it's his way of saying "This is mine and keep the fuck away."

Gold Member

In Spain I keep one pocket full of Euros and smaller amounts of Euros. In the other I keep whatever left over change I have from the USA (which I keep finding everywhere). I find US coins the best thing in the world to give to gypsies annoying me on the subway or train platforms. I give them a quarter. They are initially pleased. Then they can't figure out exactly what country the coin is from. They gather for a bit of a discussion and eventually toss it. At least US coins have enough value to keep the gypsies frustrated and away from me.

In Spain I keep one pocket full of Euros and smaller amounts of Euros. In the other I keep whatever left over change I have from the USA (which I keep finding everywhere). I find US coins the best thing in the world to give to gypsies annoying me on the subway or train platforms. I give them a quarter. They are initially pleased. Then they can't figure out exactly what country the coin is from. They gather for a bit of a discussion and eventually toss it. At least US coins have enough value to keep the gypsies frustrated and away from me.

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Looks like our dollar STILL has a use even after it loses its monetary value! :biggrin1: